Aggressive New CMS Pre-Payment Review Initiative Threatens Physician Practices and Hospitals

By Douglas M. Nadjari, Esq.

            According to a recent report in the American Medical News, The Center for Medicare and Medicaid Services (“CMS”) published plans to increase the number of pre-payment reviews of hospital and physician claims from 1.2 million to 2.7 million a year.  Pre-payment review procedures require the physician to submit copies of records for review before a claim will be paid or denied.  The process is fraught with delay and has the potential of creating a crippling cash flow problem for any practice, regardless of its size.  As reported earlier, the implementation of this ambitious plan has been delayed.  While the delay may provide a window of opportunity to review billing and coding practices for the purpose of identifying and minimizing “red flags” that may otherwise increase the risk of being placed upon pre-payment review, it suggests a full scale attack upon the “fee for service” model in favor of Accountable Care Organizations based upon “pay for performance”.

            In the short term, We recommend that practices and hospitals allow counsel to: (1) review and update compliance plans, (2) assure that those plans are implemented, updated and followed, (3) to hire consultants to perform test audits designed to identify trends that are likely to trigger audits and the imposition of pre-payment review.

            According to AMed News and the Florida chapter of the American College of Cardiology, hospital compliance personnel (as well as cardiologists, neurosurgeons and orthopedists) should be aware that First Coast Options (CMS’scontractor for Florida) is planning extensive pre-payment review of the following fifteen hospital service codes:

  • Cardiac defibrillator implant without cardiac catheter, and with major complications or comorbidities.
  • Cardiac defibrillator implant without cardiac catheter, and without major complications or comorbidities.
  • Permanent cardiac pacemaker implant with major complications or comorbidities.
  • Permanent cardiac pacemaker implant with complications or comorbidities.
  • Permanent cardiac pacemaker implant with major complications or comorbidities, or with complications and comorbidities.
  • Automatic implantable cardiac defibrillator generator procedures.
  • Percutaneous cardiovascular procedure with drug-eluding stent, and without major complications or comorbidities.
  • Percutaneous cardiovascular procedure without coronary artery stent, and without major complications or comorbidities.
  • Other vascular procedures with complications or comorbidities.
  • Other circulatory system operating room procedures.
  • Circulatory disorders except acute myocardial infarction, with cardiac catheter and without major complications or comorbidities.
  • Spinal fusion except cervical with spinal curve, malign or nine-plus fusions, and without complications or comorbidities.
  • Spinal fusion except cervical, without major complications or comorbidities.
  • Major joint replacement or reattachment of lower extremity, without major complications or comorbidities.
  • Back and neck procedures except spinal fusion, with complications or comorbidities, or disk device or neurostimulator.

            While this policy is not yet directly applicable to New York, it foreshadows the inevitable fact that Medicare (and likely private third party payors) is doing its level best to render the “fee for service” model commercially unviable as it begin to roll out Accountable Care Organizations based upon “pay for performance”.  Indeed, such withering scrutiny upon fee for service is likely a harbinger of things to come and we suggest consulting with counsel to determine how to survive in this new era. If you have any questions concerning audits, pre-payment review or demands for repayment from Medicaid, Medicare or other third-party payors, feel free to contact Douglas Nadjari at (516) 663-6536.   

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